I think what you describe applies in some, but not all cases. It probably comes down to the nature of the contract between the staffing firm and the employer. You might be describing an 'exclusive arrangement' or something like that.
I work in the federal contracting area. As a job seeker, I notice that many employers use both staffing firms and their in-house recruiting for the same positions. Staffing firms seem to be more experienced at what they do (vs. entry-level in-house HR people). Thus, they can more efficiently get the right people to be interviewed.
Most employers will prefer the friends and family approach...i.e, referrals. It bypasses the staffing firms, which they obviously don't like.
Anonymous wrote:[
The organization has a contract with a staffing agency. They are required to use a staffing agency so even if the organization finds and hires the candidate on their own, the agency gets a cut. This is to cut down on recruitment costs and playing favorites by hiring friends and family (which doesn't work if the org hires on their own).